Today’s Key Market Drivers: 5th April 2019
Euro dips against US Dollar but rallies against others.
Weaker than expected German Factory orders and the news Italy may downgrade its GDP estimates added some selling pressure to the Euro which fell against the US Dollar Thursday.
The weaker than expected data failed to dampen traders’ expectations of the Euro against the NZD which rallied through both the European and US trading sessions. The selling pressure on the Euro I believe was more to do with the positive US weekly jobless claims which were the best in months.
Traders have already fully priced in the future weakness in the Euro Area and technically the Euro is trying to put in a low in my view.
Investors eager to hear news on a US / China trade deal.
Donald Trump announced on Thursday that he would meet with the Chinese Vice Premier next week and we will know within 4 weeks if a US / China trade deal can be done. Trump said progress was being made but there were sticking points that must be addressed such as intellectual property theft.
Trump spoke from both sides of his mount on Thursday saying. “If it’s not a great deal, we’re not doing it.” “But it’s going very well.”
The more I think about it the more I think Trump will want to inflict some pain on the enemy and I think he would like nothing more than to win a few brownie points among his fans along the way by saying “China isn’t being fair, I’m sticking up for America and I am not doing a deal based on what’s on the table.” Keep in mind the US has the big stick, China is the one that has the most to lose in these negotiations and I think Trump will want to stick the knife in and give it a little twist before these negotiations are finally concluded.
All eyes on the US jobs report this Friday.
The US jobs report and the unemployment rate is released on the first Friday of each month and this month’s number once again has the potential to cause plenty of volatility on financial markets. Don’t expect much price action through the Asian or European trading sessions today as investment banks and hedge funds aren’t likely going to put big money in the markets until they know how many jobs were created in the US in the month of March. If the jobs number misses estimates we will likely see weakness on the US Dollar and a consequence of this we would see upward pressure on the Euro v US Dollar which has been heavily sold in recent weeks.
There is so much to learn about how investment banks and hedge funds trade by watching how price action happens post high impacting news events and before. The US jobs number is released at 11.30pm Sydney time tonight.
Kiwi Dollar pulls back but fails to drag the Aussie lower.
The Kiwi Dollar declined on Thursday without any high impacting news to give it the nudge lower and most of the move I believe was technical rather than fundamental. What! AB giving some credence to technical analysis being the driver of the Kiwi Dollar? C’mon, surely not!
I speak about the 200 EMA (exponential moving average) on the daily chart a lot but I don’t often speak about the 200 SMA (simple moving average) a slight variation used by some traders as their preferred big-ticket barometer. If you put a 200 SMA on the NZD v USD daily chart you will see that price is currently between the 200 EMA and 200 SMA and touched the 200 SMA on Tuesday. If price trades below the 200 EMA and 200 SMA then the NZD could get very bearish.
Be humble but always stay hungry.
About the Author: Andrew Barnett
Andrew is a professional trader and successful investor who has a strong focus on education. He is a regular Sky News Money Channel Guest and one of Australia’s most awarded and respected financial experts and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Director at LTG GoldRock, Andrew Barnett, guides thousands of traders around the world in the live market on a daily basis, advising them on buy and sell directions, as well as trading his own personal account. Andrew, a regular keynote speaker at trading and wealth-creation events throughout the Asia Pacific region, is an authorized representative registered with the Australian Securities and Investment Commission (ASIC).
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